CoinDesk Crypto

Cred is the first U.S. crypto lender to file for bankruptcy in the country. Ripple is opening regional headquarters in the Middle East. President-elect Joe Biden’s incoming administration appears to be courting at least two pro-crypto political actors for cabinet positions.

Top shelf

Bankruptcy filing
Crypto lender Cred filed for bankruptcy protection this weekend. In a Chapter 11 filing, the company announced it has hired a new board member to oversee restructuring and will consider M&A opportunities. CoinDesk’s Nathan DiCamillo reports Cred has previously disclosed “irregularities” in the handling of corporate funds by a “perpetrator of fraudulent activity,” a situation that required the firm to temporarily halt its CredEarn lending program. According to its filing, Cred listed estimated assets of between $50 million and $100 million and liabilities between $100 million and $500 million.

Bank charter
Figure Technologies, a blockchain-based financial lender, has applied for a national bank charter. Approval by the U.S. Office of the Comptroller of the Currency would simplify compliance and cut costs by allowing the startup to offer its services across the nation and consolidate its reporting duties under one office. Currently holding 96 licenses from 49 states, CEO Mike Cagney said without the national charter Figure could end up with 200 licenses by next year. Cagney previously ran SoFi, a crypto-friendly lender, which received an OCC national bank charter last month.

Related: First Mover: What’s Next for Bitcoin as Wall Street Gets Vaccine Booster

New office
Ripple has set up a regional base in Dubai, following several instances of the payments startup publicly stating it would consider leaving the U.S. due to stringent financial regulations. The San Francisco-based firm’s new office – its Middle East and North Africa (MENA) headquarters – will be within the Dubai International Financial Centre (DIFC), a financial hub with its own “independent judicial system and regulatory framework,” according to its website. Despite statements from CEO Brad Garlinghouse, there is still no indication Ripple plans to cut ties with the U.S.

Pro-crypto?
It is still unclear how, if at all, President-elect Joe Biden’s administration will affect the cryptocurrency industry, experts say. Depending on how Biden’s cabinet fills outs could seed “a lot of change” in federal handling of crypto, Kristin Smith, executive director of the Blockchain Association, said. Reportedly, Boston Fed director Lael Brainard, who is overseeing digital dollar research, is a top candidate for the U.S. Treasury Department, while former Commodity Futures Trading Commission Chairman Gary Gensler is being considered to be Wall Street’s top cop.

Privacy standards
California’s Proposition 24, also known as the California Privacy Rights Act (CPRA), could be a boon to crypto firms looking to comply with Europe’s strong privacy protections. An update to California’s currency consumer data protections, the new law, if passed, would allow people to manually opt out of biometric, racial and other forms of data collection. Thus, bringing California’s internet startups closer to Europe’s standards. While the proposition has critics, at least one crypto firm supported the measure. “An increasingly digital world means that more and more personal data is available for companies to profit off of, and laws like this are a good step towards ensuring user privacy,” said Kosala Hemachandra, the founder and CEO of MyEtherWallet.

Quick bites

• How did a massive devaluation of the Egyptian pound inspire a $100 million bitcoin ETP? (The Breakdown/CoinDesk)
• Experts weigh in on how a digital dollar may affect inflation. (CoinDesk)
• Bitcoin overtakes the base money supply of the United Kingdom and Russia combined. (Trustnodes)
• Crypto traders want trading bots – but don’t trust them. (Decrypt)
• Not-for-profit claims ING-owned payments firm helped facilitate boiler rooms and crypto scams. (The Block)

Market intel

Gradual gains
Bitcoin closed last week at least $1,600 above 2019’s yearly high of $13,880, supported by increased sales from the cryptocurrency’s network of miners. On Sunday, nearly 1,129 BTC were moved from miner wallets to cryptocurrency exchanges – the biggest single-day outflow since December 2019 – amid a seven day trend that saw miners sell more than they brought in. (Miners tend to sell during strong markets.) Still, CoinDesk Omkar Godbole reports bitcoin is consolidating towards an early support price of $13,880, with some signs the crypto is overbought.

At stake

Related: Blockchain Bites: Buterin’s Stake, Google’s Bitcoin Searches, Square’s Bustling BTC Business

Financial planners
Financial advisors are waking up to the prospect of bitcoin as a portfolio investment.

In a recent CoinDesk op-ed, macro trader Damanick Dantes wrote that cryptocurrencies like bitcoin could be a way to diversify a client’s assets, without taking on outsized risk, in an increasingly risky environment.

Given the Federal Reserve’s stated commitment to boosting inflation, while depressing interest rates, wealth managers see bitcoin as a monetary hedge. Dantes specifically looks at bitcoin’s strong correlation with negative-yielding debt and low correlation with traditional assets like the S&P 500 to guide his thinking.

“Even a small allocation to bitcoin could help offset the impact of rising inflation, which will erode the purchasing power of cash – currently yielding close to nothing,” he wrote.

But it’s not just family office managers or individual financial planners that have picked up on the scent. JPMorgan analysts have found the Grayscale Bitcoin Trust is outperforming gold exchange-traded funds (ETFs). (Grayscale and CoinDesk are both owned by Digital Currency Group.)

In a Nov. 6 report, obtained by CoinDesk’s Nathan DiCamillo, the analysts posit that institutional investors – like family offices and asset managers – could be driving this demand.

The analysts further stated that “the potential long-term upside for bitcoin is considerable if it competes more intensely with gold as an ‘alternative’ currency.” It was a point echoed by Legg Mason Capital Management CEO Bill Miller, in a CNBC appearance.

The risks of bitcoin going to zero are “lower than they’ve ever been before,” Miller said, further predicting that every major investment bank and high net worth firm will eventually have exposure to bitcoin or commodities like gold.

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Bitcoin was higher for a second day, staying in a range of between roughly $15,200 and $15,600, as news of progress in developing a coronavirus vaccine appeared to touch off a rally in U.S. stocks.  

With the outcome of last week’s U.S. presidential election now mostly settled, crypto analysts turned to other market factors, such as whether investors and bitcoin miners might take advantage of the recent price increase to pocket gains. 

“The week ahead is not as easy to call,” Matt Blom, head of sales and trading at the cryptocurrency-focused financial firm Diginex, wrote in a note to clients. “The initial thoughts lead me to believe we will consolidate, with support levels being tested throughout the early part of the week. Profit taking could feature.”

Related: Markets Spike as Coronavirus Vaccine Trial Shows 90% Success Rate

In traditional markets, reports of vaccine success vaccine pushed up U.S. stock futures. Gold changed hands at $1,915 an ounce, down 1.9% for the biggest drop in a month.

Market moves

The U.S. election is over. Whew. 

What remains is the coronavirus pandemic is far from over, nations are saddled with debt, foregone revenue is driving up corporate bankruptcies and some 10 million fewer Americans are employed than at the start of the year. A divided U.S. Congress at a time when President Donald Trump is still challenging the outcome of the election could stall passage of a new fiscal stimulus bill – anywhere from $750 billion to $1.5 trillion. Federal Reserve Chair Jerome Powell said last week that such a package is still badly needed to help the economy heal.

With those downers as the backdrop, CoinDesk’s Omkar Godbole has dug into the important question of whether the introduction of a digital dollar might spur higher inflation that’s been largely absent even after the Fed pumped expanded its balance sheet this year from $4 trillion to more than $7 trillion.

Related: Bitcoin’s Weekly Close Above 2019 High Leaves Runway Clear to $20K

It’s an academic question of sorts; the Fed is conducting research on a digital dollar but doesn’t appear in any rush to launch one. 

But Cleveland Federal Reserve President Loretta Mester suggested earlier this year that a digital dollar might represent a way for the U.S. central bank to distribute aid directly to Americans – rather than having to wait for Congress to authorize more fiscal stimulus or relying on banks and Wall Street to pass along any monetary stimulus to households and small businesses. 

Jeff Gundlach, chief executive of the $141 billion bond fund DoubleLine Capital, noted recently in a report that central bank digital currencies could “possess the necessary plumbing to directly deliver a digital currency to individuals’ bank accounts, ready to be spend via debit cards.”

“Such a mechanism could open veritable floodgates of liquidity into the consumer economy and accelerate the rate of inflation,” Gundlach wrote.  

That could have implications for bitcoin, seen by a growing number of investors as a hedge against inflation, as well as for digital-asset markets overall, where privately issued dollar-linked “stablecoins” are already circulating widely. 

President-elect Joe Biden’s stance toward the cryptocurrency is largely a blank slate, as reported by CoinDesk’s Nikhilesh De, so it’s unknown whether any of his appointees might push for a digital dollar.

With such deep troubles still facing the economy and the traditional financial system, it’s hard to rule anything out.  

Read more: Debate Rages on Whether a Digital Dollar Will Unleash Inflation

Bitcoin watch

Bitcoin’s on-chain activity suggests miner confidence in the ongoing price rally. 

On Sunday, nearly 1,129 BTC were moved from miner wallets to cryptocurrency exchanges. That’s the biggest single-day outflow since December 2019, according to data source Glassnode. Further, miners have run down inventory by 2,647 BTC over the past seven days by selling more than they mined, according to data source ByteTree.

Miners typically sell more when they feel the market has the strength to absorb their extra supply. Conversely, they tend to hoard when the market looks weak. They have to be cautious as mining profitability is positively correlated to price, and their actions often make or break price trends. 

“Miner outflows show it’s a great market to sell into,” Charlie Morris, chief investment officer at ByteTree Asset Management, told CoinDesk over WhatsApp.

The market depth suggests the recent price run looks set to continue. The bullish case looks stronger considering the past week’s strong close above the June 2019 high of $13,880. With the breakout, the cryptocurrency has toppled the final technical barrier on the road to a potential new all-time high.

However, bigger gains may be seen following a bout of consolidation or re-test of the former hurdle-turned-support of $13,880, as the daily and weekly chart indicators are signaling overbought conditions.

– Omkar Godbole

Read more: Bitcoin’s Weekly Close Above 2019 High Leaves Runway Clear to $20K

Token watch

Bitcoin (BTC): Investing legend Bill Miller, whose stock picks beat the Standard & Poor’s 500 for 15 years, tells CNBC that every major investment bank will eventually own bitcoin or something like it. 

XRP from Ripple (XRP): Payments-focused blockchain firm behind XRP token sets up regional base in Dubai while mulling exodus from U.S. due to unfavorable regulatory regime.  

Litecoin (LTC): Also-ran cryptocurrency gets included in Venezuelan government’s new crypto exchange, alongside bitcoin, dash (DASH) and the government-sponsored petro (PTR).

Bitcoin Cash (BCH): Kraken crypto exchange says it will only support upcoming hard-fork Bitcoin Cash ABC “if the hash power on the ABC network is at least 10% of the hash power on the Bitcoin Cash Node network.”  

Grin (GRIN): Privacy coin, once dubbed “bitcoin 2.0,” gets hit with 51% attack.

What’s hot

President-elect Biden’s policy positions on cryptocurrencies, blockchain looks like mostly blank slate (CoinDesk)  

Margin calls appear subdued in latest bitcoin rally as spot markets take back limelight from derivatives exchanges (CoinDesk)  

JPMorgan says family wealth-management offices may now see bitcoin as alternative to gold (CoinDesk)  

Hive Blockchain, bitcoin mining firm, brings 1.2K MicroBT WhatsMiner M30S computers online, nearly doubling hash power (CoinDesk) 

Crypto lender Cred files for bankruptcy, citing “irregularities” in the handling of corporate funds (CoinDesk) 

Analogs The latest on the economy and traditional finance

Departing from historical trend, gold and stocks are increasingly trading in tandem (WSJ)  

Turkish lira surges 4% against U.S. dollar as Erdogan dismisses central-bank governor, raising expectations that replacement will raise interest rates to combat inflation (WSJ)

Assured by public guarantees, Japanese banks ramp up support for ailing small businesses at record pace, featuring no-interest loans (WSJ) 

Report that U.S. President-Elect Biden might ease work-visa rules drives up stocks in India (Reuters)  

Tweet of the Day Related Stories

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Both bitcoin and U.S. stock futures shot up on Monday after a U.S. pharmaceutical giant announced positive results from a large-scale clinical trial of a coronavirus vaccine.

• Risk appetite improved as Pfizer said its experimental vaccine has been 90% effective in preventing infections in the ongoing trial, Bloomberg reported.
• The news raises hopes that there may soon be an effective treatment for COVID-19, which is again running rampant through regions such as the U.S. and Europe.
• CoinDesk data shows that as the news broke, bitcoin jumped from $11,500 to $11,840 in the 15 minutes to 12:00 UTC.
• That came as the futures tied to the S&P 500 surged over 100 points to reach a record high of $3,648, and Dow Jones futures rose 1500 points.
• Gold, meanwhile, fell from $1,950 to $1,900 as investors sold safe-haven assets amid the rally on Wall Street.
• The coronavirus pandemic brought the global economy to a near standstill in the second quarter and its recent resurgence is threatening to derail the fragile economic recovery.
• The vaccine news, therefore, bodes well for growth-sensitive stocks and other risky assets.
• While the S&P 500 futures continue to trade near record highs, bitcoin has erased gains to trade near $10,500.
• The cryptocurrency’s rally from October lows below $10,500 has stalled below $16,000 over the past couple of days, but, on Sunday, a weekly close above last year’s high opened the door for a continued rally, possibly to a record high.

Also read: Bitcoin’s Weekly Close Above 2019 High Leaves Runway Clear to $20K

Related Stories

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• Bitcoin’s Weekly Close Above 2019 High Leaves Runway Clear to $20K
• Coronavirus Driving Interest in CBDCs, Say Central Bank Chiefs
• As Bitcoin Surges, Google Searches Suggest Little FOMO Among Retail Investors

Bitcoin (BTC) made weekly close above 2019’s peak price, toppling the final technical barrier on the road to a potential new all-time high.

• The top cryptocurrency by market value ended last week (Sunday, UTC) at least $1,600 above the high of $13,880 observed at the end of June 2019.
• Notably, that level marked the last major resistance ahead of a possible continued rally to $20,000– bitcoin‘s lifetime high reached in December 2017.

• Bitcoin jumped over 12% in the week ended Nov. 8, confirming a five-week winning run, the longest since April.
• The price rally has been largely attributed to optimism generated by the recent disclosure of bitcoin investments by several public companies, including Square and MicroStrategy.
• Further, in a sign of confidence in the market rally, bitcoin miners, who predominantly operate with cash, are looking to sell off more coins.
• On Sunday, nearly 1,129 BTC were moved from miner wallets to cryptocurrency exchanges. That’s the biggest single-day outflow since December 2019, according to data source Glassnode.

• Miners have run down inventory by 2,647 BTC over the past seven days by selling more than they mined, according to data source ByteTree.
• This typically occurs when miners feel the market has the strength to absorb their extra supply; conversely, they tend to hoard when the market looks weak.
• Such caution is needed because, sales by miners, along with institutional investors, have the biggest influence on price, and mining profitability is positively correlated with the cryptocurrency’s price.
• “Miner outflows show its great market to sell into,” Charlie Morris, chief investment officer at ByteTree Asset Management, told CoinDesk over WhatsApp.
• Meanwhile, Sui Chung, CEO of CF Benchmarks, said that miners could be taking some price risks off the table by using their capital to lock in power prices before the northern hemisphere winter sets in.
• Bitcoin mining is an energy-intensive process and electricity prices hold large sway over profitability.
• All these things considered, the recent rally looks to have legs.
• That said, bitcoin may consolidate or retracing toward the former resistance-turned-support at $13,880 before extending the bull run.
• Technical indicators on both the daily and weekly charts are reporting overbought conditions.
• “BTC is consolidating, and there is still enough fresh money to stabilize the price,” Patrick Heusser, a senior cryptocurrency trader at Zurich-based Crypto Broker AG, told CoinDesk.
• Heusser added that some advanced traders are starting to rotate a portion of their bitcoin gains into alternative cryptocurrencies, many of which have suffered 50-80% losses over the past two months.
• At press time, bitcoin is trading largely unchanged on the day near $15,510, according to CoinDesk’s Bitcoin Price Index.
• Disclaimer: The author holds small positions in bitcoin and litecoin.

Also read: Crypto Long & Short: Bitcoin Gets Ready for a New Type of Hedge 

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With record U.S. money printing failing to achieve much-needed economic stimulus, some observers now expect creation of a “digital dollar” central bank digital currency (CBDC) will not only speed payments to consumers but also spur inflation.

The Federal Reserve has consistently undershot its 2% inflation target since the Great Recession of 2008, and the situation has only worsened this year due to the coronavirus pandemic. This is leading some to speculate that, should the central bank implement a digital dollar – which it’s not close to doing at present – soaring inflation will soon follow.  

Jeffrey Gundlach, chief executive of California-based investment management firm DoubleLine Capital, recently published a report titled “The Pandora’s Box Of Fed’s Digital Currency Will Ignite An ‘Inflationary Conflagration.'” It says: 

Related: Norway Central Bank Official Says ‘No Acute Need’ to Introduce a Digital Currency

“With CBDCs, the central banks would possess the necessary plumbing to directly deliver a digital currency to individuals’ bank accounts, ready to be spent via debit cards. Such a mechanism could open veritable floodgates of liquidity into the consumer economy and accelerate the rate of inflation.”

Indeed, direct transfer of digital dollars to individuals’ bank accounts might ensure stimulus payments reach even the poorest workers, boosting their spending power and creating upward pressure on the general price level. 

“It can have a quicker and more direct impact [compared to other tools] and should give a boost to goods and services prices,” Marc Ostwald, chief economist at London-based ADM Investor Services, told CoinDesk in an email.

It’s all about Main Street

In other words, liquidity will flow directly to Main Street instead of Wall Street, as has been the case with the Fed’s bond purchase, popularly known as quantitative easing (QE). 

Related: Coronavirus Driving Interest in CBDCs, Say Central Bank Chiefs

While the central bank expanded its balance sheet from $4 trillion to $7 trillion in the March to July period to counter the coronavirus-induced economic slowdown, the velocity of money, or the number of times a unit of money changed hands during a specific period, fell from 1.5 to 1.09. Meanwhile, prices of stocks, gold and bitcoin surged. Thus, the newly created money appears to have boosted asset price inflation.

That’s because the money created via QE or deficit spending travels through institutions (commercial banks) before reaching Main Street. In other words, banks are usually the first beneficiaries of the stimulus and they often pour extra liquidity into financial markets. 

Even before the global financial crisis (or pre-QE times), for every $20 of credit created in the banking sector, only $1 found its way into the real economy, Ostwald said. A direct transfer of CBDC to individuals’ bank accounts would help circumvent that problem. 

According to Gundlach, direct transfers of CBDCs will also accelerate the velocity of money. “That one-two punch could bring about far more inflation than central bankers bargain for,” Gundlach noted. 

However, according to Michael Englund, principal director and chief economist at Action Economics LLC, direct deposits of CBDCs into consumers’ bank accounts would instead cause a deeper drop in the velocity, at least in the short run. 

“The new tool [CBDC transfers] would only increase the degree to which the already accommodative monetary policy translates to more money [liquidity], leaving no real near-term effect on velocity and inflation,” Englund told CoinDesk in a LinkedIn chat. 

To simplify, the money supply is already outstripping economic growth. As such, people are sitting on excess liquidity, causing a drop in velocity. Direct CBDC deposits would only widen the gap between monetary growth and economic growth. 

Asymmetric rise

Englund, however, expects that velocity would eventually bounce, and the point of CBDC injection will determine the sector of the economy that would experience inflation. 

If CBDC fuels new personal demand deposits, it would drive up consumer prices. If it fuels investment activity, it would raise the price of investment goods. And if it’s used to fund medical care, it would raise medical prices first,” Englund said. “The point of injection would be non-neutral, allowing a shift in relative prices, so different indexes would be impacted differently.”

This is similar to QE-led asset price rallies. Banks and financial institutions, which are the first beneficiaries of the QE money, decide the injection point, and bring about asymmetric inflation in various assets. 

Big boost to inflation unlikely

“CBDCs won’t have a big inflationary consequence,” Ariel Zetlin-Jones, associate professor of economics at Carnegie Mellon, told CoinDesk in a Zoom call while adding that the Fed would not adopt a digital dollar without assessing its impact on price stability and conduct of monetary policy. 

If CBDC fuels new personal demand deposits, it would drive up consumer prices. If it fuels investment activity, it would raise the price of investment goods.

Besides, the impact of direct transfers of digital dollars would depend on the macroeconomic context. 

For instance, had the Fed channeled digital dollars into consumers’ pockets during the coronavirus lockdown, the impact on the general price level could have been minimal at best. 

“People couldn’t go anywhere and spend their money, and that massive demand shock would have counteracted CBDC-led inflation,” Jones noted.

During an economic boom, direct transfers could in all probability cause a significant rise in inflation. The Fed, however, is unlikely to do that. 

According to Marc Chandler, a chief market strategist at Bannockburn Global Forex, CBDC will be just another payment system and won’t boost liquidity or money velocity. 

“Surely, the introduction of the Amazon credit card did not boost liquidity in the sense that economists mean it. As such, there is no reason to think that another payment system will bring inflation,” Chandler said.

What the digital dollar does to inflation and the Fed’s monetary policy stance remains to be seen. Moreover, CBDC is still a concept. However, it could conceivably be a form of money transfer that would enable the Fed to disburse money to all individuals in America, as noted by Cleveland Federal Reserve President Loretta Mester earlier this year. 

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The deputy governor of the Norway’s central bank said there’s no urgent need for the nation to launch a digital krone in a speech at the country’s Finance Payments Conference on Thursday.

Outlining the Norges Bank’s current assessment of a central bank digital currency (CBDC) for real-time payments, Ida Wolden Bache said Norway is already seeing falling levels of cash use and increasing adoption of payment apps tapping bank deposits that may be factors in deciding on such a launch.

But cash serves several useful functions to society that users are not necessarily aware of when choosing payment methods, Wolden Bache continued. These include as a back-up should electronic payments not be available, as “widely accessible” legal tender and as a “credit risk-free alternative to bank deposits.”

Related: Debate Rages on Whether a Digital Dollar Will Unleash Inflation

As such, the question is not should the Norges Bank introduce a digital currency to work alongside cash, but rather would anything important be lost if it didn’t and cash “died out.”

“Could CBDC provide more than cash can offer, in the form of a greater range of uses and more innovation?” Wolden Bache asked.

There are other factors too, with the deputy governor citing the need to be prepared with a CBDC should the payments system move in a different direction than can be predicted currently – what she called the “precautionary principle.”

The deputy governor said challenges from “different forms of money” like the Libra cryptocurrency project initiated by Facebook should be taken into account. So too must “structural changes” in banks’ payment infrastructure.

Related: Coronavirus Driving Interest in CBDCs, Say Central Bank Chiefs

“We must think through the effect these changes may have on competition, contingency solutions and national governance and control of the payment system,” she said.

Norges Bank has been investigating CBDCs since 2017, yet a potential introduction is still “some way off” according to Wolden Bache. “The lack of urgency reflects our view so far that there is no acute need to introduce a CBDC.”

That’s largely because CBDCs raise “fundamental questions as to the role of central bank money,” according to the official. “This is much more than a question of technology.”

A CBDC introduction would bring a “substantial change” in the monetary system and would require a decision from government as well as possible changes to banking law, she said.

The central bank’s CBDC research is now its third phase, expected to be completed early next year. Wolden Bache detailed that Norges Bank is working on defining the features a CBDC should have and looking at technical solutions.

“We are also drawing on other central banks’ experience and plans,” Wolden Bache said. “Possible strategies for testing and experimenting with technological solutions are also being assessed.”

Most central banks now appear to be at least looking into CBDCs, with a few starting to state publicly that a launch is likely in coming years, while China is already closing in on a launch in the near future.

Also read: Digital Euro Within Decade ‘Very Likely,’ Says Finland’s Chief Central Banker

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New Jersey has inched closer to implementing a cryptocurrency license similar to the “BitLicense” mandated in neighboring New York since 2015.

• Sponsored by Senator Nellie Pou (D.-35), a bill known as the “Digital Asset and Blockchain Technology Act” was introduced to the Senate last Thursday.
• Senate bill 3132 seeks to regulate cryptocurrency service providers under the oversight of the N.J. Department of Banking and Insurance.
• The proposed law would require the issuance of a license for any entity looking to provide digital asset trading, storage, purchase, sales, exchange, borrowing/lending or issuance services.
• Those entities, including businesses and individuals, will not be able to conduct any business activity unless they either have obtained a license in New Jersey or have a reciprocal license in another state.
• Unlicensed entities operating in New Jersey could be on the hook for $500 a day until an application for a license is filed.
• The senate bill follows the introduction of same legislation to the state’s General Assembly in February (where it’s bill number A2891) and subsequent referral to the Assembly Appropriations Committee.
• A presence in both houses would appear to signal a high likelihood the bill could become law, or at least is being taken seriously.

See also: New Jersey Lawmaker Wants to Create a Crypto License

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The GrayScale Bitcoin Trust is outperforming gold exchange-traded funds, a trend perhaps driven by institutional investors like family offices, according to a report by JPMorgan analysts that CoinDesk obtained.

• “This contract lends support to the idea that some investors that previously invested in gold ETFs such as family offices, may be looking at bitcoin as an alternative to gold,” the analysts wrote in the Nov. 6 report.
• The climb of the Grayscale Bitcoin Trust indicates it’s not just millennials driving demand for bitcoin, but institutional investors like family offices and asset managers, the analysts said. Grayscale is part of Digital Currency Group, CoinDesk’s parent company.
• The analysts continued: “As we had highlighted in our previous [report] of October 23rd, the potential long-term upside for bitcoin is considerable if it competes more intensely with gold as an ‘alternative’ currency given that the market cap of bitcoin would have to rise 10 times from here to match the total private sector investment in gold via ETFs or bars and coins.”
• The analysts noted, however, that the “sharp spike in prices this week appears to have taken bitcoin close to overbought levels” which could trigger a sell-off.

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Crypto lender Cred Inc. has filed for Chapter 11 bankruptcy protection in Delaware on Saturday.

• In its filing, Cred listed estimated assets of between $50 million and $100 million and liabilities between $100 million and $500 million.
• In an emailed press release, Cred said Grant Lyon has been named to the company’s board to oversee the restructuring process. It has also hired MACCO Restructuring Group as financial advisor to evaluate M&A and other restructuring opportunities.
• In October, the lender published a cryptic letter saying that it has experienced “irregularities” in the handling of “specific” corporate funds by a “perpetrator of fraudulent activity.” In response, Cred said it had been advised by legal counsel to temporarily suspend inflows and outflows of funds relating to its CredEarn program.
• At the same time, trading platform Uphold told customers that it had “decided to discontinue its relationship with Cred.”
• Cred may have already been in a tenuous position as several crypto lenders struggled to weather the bitcoin crash in March, with some making margin calls of $100 million or more.
• Cred’s CEO Dan Schatt did not immediately respond to request for comment.

UPDATED 11/8/20 20:11 UTC: Adds assets/liabilities, new board member and hiring of restructuring firm.

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Privacy-centric blockchain network Grin (GRIN) is undergoing a 51% attack, an event in which a miner (or miners) acquires more than 50% of the network’s mining hash power and takes control, according to a notice at the bottom of the Grin protocol’s website.  

• According to 2miners.com, which is responsible for 19.1% of the current hashpower on Grin, the unknown miner(s) grabbed control of 57.4% of the network’s hashpower.
• While the attack is underway, the protocol is warning users to wait for extra confirmations on transactions for payment finality.
• Grin, which was the first cryptocurrency to test privacy protocol MimbleWimble, drew an estimated $100 million in venture capital to mine it, was once called “Bitcoin 2.0.”
• GRIN coins were down 2.23% to $0.235 at press time.

See also: Ethereum Classic’s Terrible, Horrible, No Good, Very Bad Week

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Blockchain payments firm Ripple has set up a regional base in Dubai.

• As reported by the Emirate News Agency on Saturday, the company’s new Middle East and North Africa (MENA) headquarters will be within the Dubai International Financial Centre (DIFC), which announced the news.
• The DIFC is a financial hub with over 2,400 companies and its own “independent judicial system and regulatory framework,” according to its website.
• “Ripple already has a significant client base in the MENA region and the opportunity to co-locate with our customers made DIFC a natural choice,” said Navin Gupta, managing director for South Asia and MENA at Ripple.
• “Our regional office will serve as a springboard to introduce our blockchain based solutions and deepen our ties with even more financial institutions in the region,” he added. 
• Dubai is the largest city in the United Arab Emirates (UAE) and one of the seven emirates that form its Federal Supreme Council.
• The announcement comes as Ripple is considering a move away from its home base in San Francisco in the U.S.
• The company’s CEO, Brad Garlinghouse, recently said an unfavorable regulatory regime for the XRP cryptocurrency in the states means nations such as the UK, Switzerland, Singapore, Japan and the United Arab Emirates were all being eyed as potential alternative bases.
• As yet, however, there is no indication from Ripple that such a move is going ahead.
• Ripple is closely tied to XRP, helping with its development and using the cryptocurrency in some of its products including cross-border payments and, more recently, loans.

Also read: Ripple Keeps Pumping Funds Into MoneyGram

CORRECTION 11/08/220 12:09 UTC: Corrects name of Ripple CEO to Brad Garlinghouse

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Joe Biden’s picks to head key regulatory agencies could redefine cryptocurrency policy in the coming years, although it’s unclear exactly how. 

The Associated Press declared on Saturday that Biden, the Democratic nominee, beat President Donald Trump, a first-term Republican in an election that was marked by division and the continued spread of the COVID-19 pandemic. While the former vice president didn’t highlight crypto issues in his campaign, some of Biden’s supporters hope he will advocate for reform on tech policies, while major companies are hoping to escape antitrust investigations.

To be sure, at press time Trump had not conceded and protracted court challenges remain a possibility given the closeness of the race and the polarized environment.

Related: US Seized More Than $1B in Silk Road–Linked Bitcoins, Seeks Forfeiture

Close to three decades ago as a U.S. senator from Delaware, Biden introduced a pair of bills that would have outlawed encryption, inadvertently spurring the development of PGP keys. 

Biden has so far kept a tight lid on who his campaign will nominate to key positions, but his top pick to run the U.S. Treasury Department is reportedly Federal Reserve Governor Lael Brainard, who is overseeing the Boston Fed’s research into a digital dollar. 

Former Commodity Futures Trading Commission Chairman Gary Gensler may also be tapped to help Biden’s team plan out oversight of Wall Street, the Wall Street Journal reported Friday.

“We’re not hearing many names floating around for the other positions,” Kristin Smith, executive director of the Blockchain Association, told CoinDesk last month.

Related: First Mover: Bitcoin Likes Biden (and Fed’s Powell) as Price Approaches $15K

There could be “a lot of change” in how the U.S. approaches cryptocurrencies under a Biden presidency, though it’s up in the air whether that is good or bad for the industry, Smith said.

“If we’re looking at the administration, I think our ideal scenario is to have someone with a strong familiarity with those positions,” she said. 

Read more: Election 2020: What’s at Stake for the Crypto Industry

John Collins, a partner at advisory firm FS Vector, told CoinDesk last month that while crypto is likely to be a low priority for the incoming administration given the economy and other pressing issues, the space should still have room to grow.

“Things like the crypto custody guidance for banks, I don’t see that going anywhere. I wouldn’t expect a Biden [Office of the Comptroller of the Currency] to withdraw that but I also think it’ll be difficult to get potentially [new regulations],” he said. 

Collins also said Biden’s term is likely to see political appointees who come from the crypto sector, which has been rare so far.

Indeed, Vice President-elect Kamala Harris’s team already includes Ryan Montoya, the former chief technology officer at the Sacramento Kings, who oversaw the NBA team’s use of various blockchain-related tools and platforms, according to Decrypt Media.

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Mutual fund legend Bill Miller told CNBC Friday that the risks of bitcoin going to zero are “lower than they’ve ever been before” and predicted more institutional investment in the cryptocurrency.

“The bitcoin story is very easy, it’s supply and demand,” Miller said. “Bitcoin’s supply is growing around 2.5% a year and the demand is growing faster than that.”

When he was managing the Legg Mason Capital Management Value Trust Fund, Miller beat the S&P 500 for 15 years. He’s now the chief investment officer of Miller Value Partners. In December 2017, Miller revealed that his MVP1 hedge fund had half of its investments in bitcoin. 

Related: Market Wrap: Bitcoin Loses Steam at $15.9K; Over 600K ETH Yanked From DeFi

On Friday, Miller warned of inflation “coming back” with the Federal Reserve “gunning the money supply” and future fiscal relief coming from Congress. 

Following MicroStrategy’s purchase of $425 million in bitcoin, Square’s $50 million bitcoin investment and PayPal’s support of crypto buying and selling on its platform, Miller said every major investment bank and high net worth firm will eventually have exposure to bitcoin or commodities like gold. He added that bitcoin has performed well over the past three-, five- and 10-year periods. 

Miller, who serves on the investment committee for the endowment of Baltimore-based Johns Hopkins University, said that the endowment’s chief investment officer told him that “everybody is going to want to own at least some bitcoin” because of its “asymmetric properties.” 

“[The endowment] may never own bitcoin,” Miller said. Yet, “for a college endowment that’s a bold statement,” he added.

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A bitcoin rally to new 2020 highs has been slowed by lower spot volume. Meanwhile, some ether investors are moving capital out of DeFi.

• Bitcoin (BTC) trading around $15,502 as of 21:00 UTC (4 p.m. ET). Gaining 2.6% over the previous 24 hours.
• Bitcoin’s 24-hour range: $15,190-$15,934
• BTC near its 10-day moving average but above the 50-day, a sideways signal for market technicians.

Bitcoin’s price rise stalled Friday after making gains over the past 24 hours, most notably going as high as $15,934, according to CoinDesk 20 data. It was trading at $15,502 as of press time. 

“BTC has been bullish for the last four weeks, incredibly rallying from $10,000 to $15,000,” noted Ian Balina, chief executive officer of analysis firm Token Metrics. “This month’s rally is similar to its previous big rally back in 2017 when BTC rallied from $6,000 to almost $20,000 over November and December.”

Related: Licensed Swiss Crypto Bank Launches Tezos Trading and Staking

The last time bitcoin’s price was at these levels was back on Jan. 7, 2018, when its 24-hour low was $15,632, a descent from that day’s $16,861 high during an overall market sell-off, according to the CoinDesk 20. 

“The next resistance level is between $16,000 and $17,000,” Balina added. “If it flies by that, it can retest its all-time high and possibly move above $20,000.”

Read More: As Bitcoin Surges, Google Searches Suggest Little FOMO Among Retail 

A bitcoin price push higher will likely require the return of higher-than-average spot volumes. Volumes for Friday were much lower than Thursday, which at $1,569,081,137 was the highest daily average volume day since July 27. On that summer day it hit $1,579,784,44 on major USD/BTC spot exchanges. As of press time, Friday’s spot exchange volume was at $1,064,734,786. 

Related: First Mover: Resistance Is Futile as Bitcoin Breaches $15K, Crypto Gets Greedy

Futures open interest for bitcoin Thursday matched a record high from Aug. 17. “Longer-term trends remain very bullish. Bitcoin futures aggregate open interest is at an all-time high at $5.7 billion and perpetual swaps funding rates are trending up,” noted Jason Lau, chief operating officer of San Francisco-based exchange OKCoin. 

“The minor pullback today is normal and healthy,” Lau told CoinDesk. “In the past, bitcoin has experienced strong, quick moves and retracted much more. I’d look to see if BTC can settle in and establish a base before making another move upwards.”

Bitcoin’s dominance, a measure of the world’s oldest cryptocurrency’s market cap as a percentage of total crypto assets, is starting to dip. After a steady October and early November rise to 65.5%, it dropped on Friday.

Jean-Marc Bonnefous, managing partner of investment firm Tellurian Capital, said bitcoin might be losing some momentum after its stratospheric price rise, adding that some investors make take profits and plow them into alternative cryptocurrencies, or altcoins. 

“BTC has already done quite a bit of work to the upside and will need to take a breather,” Bonnefous said. “At some point the rotation will occur again from BTC to these heavily sold alt tokens.”

Ether locked in DeFi drops

The second-largest cryptocurrency by market capitalization, ether (ETH), was up Friday, trading around $442 and climbing 7% in 24 hours as of 21:00 UTC (4:00 p.m. ET). 

Read More: Vitalik Buterin Sends $1.4M of Ether in Preparation for Ethereum 2.0 Staking

Since Oct. 20, when the amount of ether locked in decentralized finance, or DeFI, was at 9,211,000 ETH, investors have been pulling the cryptocurrency out. Over 642,000 ETH was moved out of DeFi as of press time, down to 8,569,000 ETH, according to data aggregator DeFi Pulse. 

The trend follows a rocky past 30 days for ether locked in DeFi, as about one month ago the amount of ether into DeFi was at 8,423,000 ETH. Vishal Shah, an options trader and founder of derivatives venue Alpha5, says ether’s gyrations locked has to do with the ethereal nature of Ethereum’s DeFi products. 

“Most of the ETH locked in DeFi is to accumulate or accrue tokens that don’t have a tenable value,” Shah noted. “And as those values started to fall dramatically, the ‘APY’ [annual percentage yield] that served as the bait for participation in various pools naturally started dwindling.” 

Other markets

Digital assets on the CoinDesk 20 are all green Friday. Notable winners as of 21:00 UTC (4:00 p.m. ET):

• orchid (OXT) + 12.8%
• tezos (XTZ) + 7.1%
• 0x (ZRX) + 7%

One notable loser:

• monero (XMR) – 0.65%

Equities:

• The Nikkei 225 ended the day climbing 0.91% as materials stocks boosted the index, including Kobe Steel, up 11%, and Nippon Sheet Glass Co., gaining 10%.
• Europe’s FTSE 100 closed flat, in the green 0.07% as investor sentiment was mixed between fresh lockdowns and the uncertainty over the U.S. presidential election.
• In the United States the S&P 500 gained 0.20% as investors await definitive election results amid better-than-expected unemployment numbers.

Read More: Square Reports Over $1B in Quarterly Bitcoin Revenue for First Time

Commodities:

• Oil was down 2.8%. Price per barrel of West Texas Intermediate crude: $37.39.
• Gold was in the green 0.14% and at $1,952 as of press time.

Treasurys:

• U.S. Treasury bond yields all climbed Friday. Yields, which move in the opposite direction as price, were up most on the two-year bond, jumping to 0.159 and in the green 9.6%.

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On Election Day, Californians chose not only the direction of their government but also the direction of some of the laws that government will administer. With 56% of voters approving it thus far, Proposition 24, also known as the California Privacy Rights Act (CPRA), is on its way to replacing key components of the California Consumer Privacy Act (CCPA), one of the more robust data privacy laws in the country.

While the CPRA is not without controversy, it raises the stakes for non-compliance and encourages businesses, including cryptocurrency exchanges, to take additional steps to respect user privacy. It also has the potential to bring those businesses closer to complying with the General Data Protection Act, the European Union privacy law that goes further than the CPRA. 

“The silver lining is that an exchange that has been attempting to achieve compliance under the GDPR (e.g., employing accepted hashing techniques to effectuate data ‘deletions’) could use some of those same measures to demonstrate compliance under the CPRA,” said Steven Blickensderfer, a technology and privacy lawyer at the firm Carlton Fields. “In effect, the CPRA may force exchanges to look globally and think holistically about their privacy compliance, which may not be a bad thing after all.”

The CCPA vs. the CPRA

Related: Federal Reserve Keeps Rates Close to Zero, Maintains Asset Purchases

The CCPA was the first law of its kind in the United States. The law empowers California consumers to know when private companies collect, share or sell their data and to stop that sale if necessary. It applies to companies with annual gross revenue of more than $25 million or that possess information on 50,000 or more consumers. 

The CPRA adds additional protections for sensitive data including biometric data, location data and racial data, among others. A new state agency with a budget of $10 million will enforce the law, set to go into effect in 2023. Previously, this task had fallen to the arguably understaffed California Attorney General’s office. 

Cryptocurrency and Universal Basic Income advocate Andrew Yang, who ran for U.S. president in the Democratic primary, was the chair of the proposition’s advisory board. He said this could set the bar for other states. 

Read more: Privacy Laws Are Only as Effective as the Companies Implementing Them

Related: Wasabi Wallet 2.0 Will Offer Automatic CoinJoins by Default to Boost Privacy

“After this becomes the law in California, I believe other states are going to look up and say, ‘Why do Californians have all these data and privacy rights that we don’t have?’” Yang told ABC7 News. “So, as usual, California could end up leading the way.”

At least one crypto company supported the passage of the law. Kosala Hemachandra, the founder and CEO of Los Angeles-based MyEtherWallet (MEW), said the company is a big proponent of initiatives like Proposition 24, as well as laws that increase data privacy and give people control over how their data is used and distributed. 

“An increasingly digital world means that more and more personal data is available for companies to profit off of, and laws like this are a good step towards ensuring user privacy,” said Hemachandra in an email to CoinDesk. 

“MEW doesn’t collect data on our users, and we’re against the practice of mass data collection without the proper consent. User privacy will continue to become an increasingly important issue in the days and years to come, and it’ll continue to be a right that we uphold for our users.”

Not a data privacy panacea

The law is not without controversy, however. In a statement released in mid-October, the American Civil Liberties Union and several of its California chapters opposed the proposition. 

“Proposition 24 won’t strengthen privacy rights for Californians,” wrote Jacob Snow and Chris Conley of the Northern California ACLU. “Instead, it will undermine protections in current law and increase the burden on people to protect themselves – in ways that will disproportionately harm poor people and people of color.”

The CPRA allows people to manually opt out of data collection, which they would have to do for the relevant digital services they use, placing that burden on the consumer rather than the companies. 

In July, the Electronic Frontier Foundation (EFF) wrote about its concerns that the law could result in expanded “pay for privacy” schemes. 

Read more: Downvoted: Security Researchers Slam Voatz Over Stance on White-Hat Hackers

“Specifically, the initiative would exempt ‘loyalty clubs’ from the CCPA’s existing limit on businesses charging different prices to consumers who exercise their privacy rights,” wrote Lee Tien, Adam Schwartz and Hayley Tsukayama.

Effectively, this means that companies could charge people more if they asserted their privacy rights. One example of this could be a media company offering a free subscription if customers chose not to exert their rights. Privacy advocates contend this would disproportionately impact low-income consumers. 

The impact going forward

Criticism of the Prop. 24 deserves further consideration and action, but Blickensderfer laid out a few benefits to the law when it’s implemented. 

“The creation of an agency dedicated to enforcing California’s consumer privacy laws is a potential game-changer,” he said. 

One criticism of the CCPA by privacy advocates is the California Attorney General’s office is spread too thin and not in a position to enforce the law effectively, according to Blickensderfer. Having a dedicated privacy watchdog in the U.S. would change that and mirror how privacy is enforced in Europe and other parts of the world. 

It also introduces another, more proactive model of enforcement aside from “private causes of action,” he said. A private right of action allows an individual to sue for relief from injuries caused by a violation of a legal requirement, but only if harm or injuries have already occured. 

Also, the CPRA brings California a few steps closer to Europe’s GDPR. 

“In fact, I would not be surprised if eventually we see efforts made to determine that California is an adequate jurisdiction under the GDPR for purposes of approving cross-border transfers from the European Economic Area to California,” he said. 

Read more: EU Privacy Shield Ruling Is an Opportunity and Conundrum for Decentralized Tech

As CoinDesk has previously reported, in July the Court of Justice of the European Union (CJEU) struck down a key data-sharing agreement between the United States and European Union. 

The 2016 agreement, known as the Privacy Shield, let American companies self-certify they are complying with data privacy laws such as the GDPR. The ruling focused in large part on the lack of a federal privacy law in the U.S., and the ways the U.S. security agencies conduct extensive surveillance of individuals including their data.   

“That could be a potential boon for business in California, as everyone is still struggling to figure out the legality of such transfers,” said Blickensderfer. 

Businesses will have to likely go beyond CCPA compliance and further in the direction of the GDPR to be compliant with CPRA. With 2023 set for implementation, though, there are a couple of years to work this out. But that doesn’t mean there is any reason to delay. 

“As in Europe, once enforcement starts the new regulator will likely have little compassion for businesses that have had two years to come into compliance,” said Blickensderfer 

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Figure Technologies has applied for a national bank charter that would simplify compliance and cut costs for the blockchain-based consumer lending startup.

• Former SoFi executive Mike Cagney’s fintech company is seeking the Office of the Comptroller of the Currency’s approval to offer its home equity loans and financing services across the U.S.
• Currently, Figure has 96 licenses from 49 states, and CEO Cagney says that without the national charter it could end up with 200 licenses by next year. Being regulated as a national bank would replace that expensive hodgepodge with a single overseer.
• Figure’s Provenance platform is the tech unicorn’s claim to fame. The company says the blockchain platform is far more efficient at processing loans than traditional mechanisms.
• In March, Figure conducted on-chain every step of a $150 million home equity loan securitization. 
• SoFi, Cagney’s previous company, was approved for a national bank charter by the OCC last month. It was the online lender’s second attempt; the fintech tried unsuccessfully when Cagney still ran it a few years ago. 

Read more: Figure Technologies Securitizes $150M of Home Equity Loans on Blockchain

UPDATE (Nov. 6, 20:20 UTC): Added links and background about CEO’s last venture.

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Red-hot spot markets are primarily fueling bitcoin’s recent rally as the leading cryptocurrency trades at three-year highs around $15,500, suggesting the bull market may have room to continue.

Unlike previously rallies, derivatives markets are playing a markedly less prominent role, demonstrated by mild liquidation volumes. 

The presence of derivatives in bitcoin’s ongoing rally is “muted in comparison to previous run-ups,” said Matt Kaye, managing partner at Santa Monica-based Blockhead Capital. Talking to CoinDesk, Kaye said, “The market is clearly spot-dominated, and it appears that most of the bidding is coming out of the U.S.,” continuing a trend CoinDesk reported in May.

Related: Bitcoin’s Rivalry With Gold Plus Millennial Interest Gives It ‘Considerable’ Upside Potential: JPMorgan

On Thursday, BitMEX, a cryptocurrency derivatives exchange known for attracting unorthodox, high-leverage traders, reported $54 million in liquidated bitcoin futures contracts during the most recent rally, well below the still mild liquidation volume of $75 million reported on Oct. 21 when bitcoin reached then-new yearly highs, breaking above $13,000, according to Skew.

Large liquidations might not happen until the leading cryptocurrency breaks above its all-time highs just below $20,000, said Kyle Davies, co-founder of Three Arrows Capital, in a direct message with CoinDesk. “Frankly, there’s not much leverage in the market now anyways,” he said. 

Significant price movements typically trigger large-scale liquidations in characteristically overleveraged cryptocurrency futures markets. But the mild liquidations throughout bitcoin’s recent rally signals that the typically prominent derivatives markets has taken a back seat and the spot market has the wheel. 

Read more: Bitcoin’s Rivalry With Gold Plus Millennial Interest Gives It ‘Considerable’ Upside Potential: JPMorgan

Related: O(1) Labs Raises $10.9M More for Lightweight Mina Protocol

Corroborating the quietness of derivatives markets amid bitcoin’s soaring price action is that less than $500 million in bitcoin futures positions had been liquidated in the past 24 hours, as of 14:35 UTC Friday, across seven leading trading platforms as bitcoin neared $16,000. The largest reported liquidation of $5.97 million happened on BitMEX, according to derivatives data aggregator Bybt.

Regulatory troubles weathered by leading leveraged trading exchanges including BitMEX, OKEx and Huobi explain the subdued influence that derivatives markets play in bitcoin’s current rally, according to Davies. 

That liquidation volumes are low relative to bitcoin’s price movements could be an encouraging sign for bitcoin bulls, according to Aditya Das, cryptocurrency market analyst at Brave New Coin.

“The quiet funding rate and relatively low number of liquidations could be read as a positive sign that this rally may have legs and is not close to overheating because of speculators,” he told CoinDesk in a direct message. 

The market could also be signaling that futures traders simply “missed out on the big move,” Das added. 

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The Canadian Revenue Agency is asking a judge to force cryptocurrency exchange Coinsquare to hand over seven years of client data in a legal action that could help it audit Canadians for unreported crypto gains.

• CRA wants to check whether Coinsquare’s users “complied” with their tax reporting obligations, according to the National Post.
• Canada’s tax collectors appear to be testing a tactic their U.S. peers at the Internal Revenue Service deployed against Coinbase: pursue crypto customer records (with the help of the courts).
• However, CRA’s demands for data on all customers dating back to 2013 is far larger than the IRS’ comparatively limited request for documents on high-spending clients, a play that ultimately netted some 13,000 records.
• Coinsquare CEO Stacey Hoisak told the National Post her exchange is still deciding how to react in response to the CRA’s September demand.
• It was not immediately clear if CRA’s inquiry is related to the Ontario Securities Commission’s July crackdown on Coinsquare’s reported fake trading volume.
• Coinsquare’s top brass resigned and paid hefty fines in a settlement where they admitted to orchestrating a wash trading operation.

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Cash App generated over $1 billion in bitcoin revenues in Q3. Vitalik Buterin sent 3,200 ETH to Ethereum 2.0’s deposit contract. Google search data shows little “FOMO” amid the current market bull run.

Top shelf

Monster quarter
Cash App, the mobile payment service of Square (helmed by Twitter CEO Jack Dorsey), generated $1.63 billion in bitcoin revenue and $32 million in bitcoin gross profit for Square during the third quarter of 2020, according to the company’s Q3 investor letter. This is 11 times more in bitcoin revenue than Q2’s $875 million, when Square profited $17 million from selling bitcoin. Still, Square’s bitcoin business has relatively tame profits for a money services business, with profit margins shy of 2%. In an earnings call, Dorsey said, “We believe [bitcoin] will be the native currency of the internet, and help people thrive around the world and the economy.”

Buterin’s stake
Ethereum founder Vitalik Buterin has sent 3,200 ether, worth around $1.4 million, to Ethereum 2.0’s newly launched deposit contract. Ethereum 2.0 is making progress on its transition to proof-of-stake, which will progress to the next phase of readiness once 524,288 ether are staked in the contract. The deposit contract now holds 38,693 ether, worth some $17 million. Industry publication TrustedNodes reports that Buterin’s “VB2” address sent 100 transactions in total.

Related: Money Reimagined: Crypto-Informed Ideas for the Future of Government

VASP
South Korea’s Financial Services Commission (FSC) is seeking legal amendments that would make it mandatory for virtual asset service providers (VASPs) – generally meaning custodians, wallet providers or brokerages – within the country to report the names of their customers. The change is part of a larger sweep affecting most money services (from gift cards to electronically registered stocks) to help guard against money laundering. If approved, VASPs will be required to use real-name accounts in their financial transactions with customers and implement other data security measures. The rules are aligned with FATF’s “travel rule” recommendations.

Identity
Several Spanish companies, including Banco Santander, have grouped together to develop a “self-managed” digital identity system using blockchain technology. The organization, Dalion, said the “secure and reliable” ID platform could be used in car rentals, insurance and loan applications, and sign-ups at utility providers. Designed to give users control over personal information it also streamlines “tedious” form filling by automatically providing the validated data required by the requesting entity. Using the Quorum blockchain, the group said, will ensure that data has not been altered. The system could roll out in May 2021.

Quick bites

• Buggy code in a Compound Finance fork froze $1 million in ethereum tokens. (CoinDesk)
• The United States Department of Justice (DOJ) is pursuing antitrust action against Visa’s planned $5.3 billion acquisition of fintech, and crypto-friendly, firm Plaid. (CoinDesk)
• “Crypto Twitter is not as influential as it likes to think, according to researchers at BDCenter.” (Decrypt)
• Grayscale’s Ethereum Trust hits $1 billion in assets under management. (The Block)
• Andy Edstrom: Financial advisors, Bitcoin is the next Amazon. (CoinDesk)

Market intel

No FOMO
Despite climbing to levels last seen in the 2017 bitcoin bubble, web search data suggest little crypto “FOMO” among the masses. After getting close to $16,000 yesterday, bitcoin is still trading in the mid-$15K range, nearly 120% up on a year-to-date basis. Google Trends, a barometer used to gauge general interest in trending topics, is currently returning a value of 10 for the worldwide search query “bitcoin price” – significantly lower than the value of 93 observed in early December 2017 following bitcoin’s record break above $15,000.

At stake

Gradually, then suddenly
CoinDesk’s head of research, Noelle Acheson, thinks crypto is still in the “gradual” phase of “gradually, then suddenly.” Reading the tea leaves of headlines – from PayPal’s crypto play to Microstrategy’s bitcoin buy – in October can create the image that mass adoption is right around the corner. The truth is, crypto is still maturing.

Related: First Mover: Resistance Is Futile as Bitcoin Breaches $15K, Crypto Gets Greedy

In the latest CoinDesk Monthly Review (available for download here), the team looks back at some key Bitcoin and Ethereum performance metrics from last month. What was found is gathering momentum, and an ever clearer sense of real use cases, albeit gradually.

Notably, Ethereum’s volatility, transaction count and fees have cooled – after a summer that saw the second-largest blockchain “flippen” Bitcoin in many of those key measures.

In September, ETH’s 30-day volatility (annualized) spiked approximately 110%. While bitcoin’s volatility flattened throughout October, ether’s declined – a signal that “the ETH market is still more immature than that of BTC,” Acheson and CoinDesk research analyst Christine Kim write.

Further, average transaction fees on Ethereum fell over 80% in October, retracing September’s sharp increase. A similar drop in miner revenues also occurred, as dapp activity cooled.

“This is a positive sign for the network, which in recent months has been pushed to its limits by the splashy debuts of new DeFi assets such as COMP, SUSHI and others,” they write.

It’s likely that many more rises and falls are in store before Ethereum “suddenly” takes hold.

Who won #CryptoTwitter? Related Stories

• Blockchain Bites: Bitcoin at $15K, $1B Silk Road Bust
• First Mover: Bitcoin Likes Biden (and Fed’s Powell) as Price Approaches $15K

Publicly traded mining company Hive Blockchain purchased and immediately deployed its largest batch of new ASIC miners Friday, bringing 1,240 MicroBT WhatsMiner M30S machines online.

• The firm’s aggregate operating hashrate nearly doubles with the addition of the new M30S miners, according to a statement, in what is the largest single purchase of new machines for the Vancouver-based company.
• Hive’s current hash power has almost doubled from 116 peta hash per second (PH/s) to 229 PH/s, thanks to the new machines. A total operating hash power of 1,000 PH/s is the company’s goal within the next 12 months, according to Frank Holmes, interim executive chairman.
• Amid the ongoing coronavirus pandemic, shipping and delivery logistics for miner manufacturers remains disrupted, affecting Hive and buyers. Hive is still waiting on the full delivery of 200 S17e miners, which were delayed by production issues at ASIC-manufacturer Bitmain.
• Hive’s expansion comes as bitcoin is trading at a three-year high of $15,500, up 116% this year.
• The expected profitability of these new machines, moreover, is boosted by the significant drop in mining difficulty Tuesday despite significant increase in bitcoin’s price, as CoinDesk previously reported.
• Year to date, shares of Hive, which had Q1 net income of $1.8 million, have gained 488 percent, currently trading at $0.53. 

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